A long-running dispute finally resolved

Of the long-running trade-related disputes that had troubled relations between Japan and the Community up until the 1980s, there was hope that one, at least, was within sight of having been largely settled by the end of that decade. This concerned the structure of excise taxation applied to alcoholic beverages in Japan’s Liquor Tax Law (shuzeihō), ¹ which underwent a major reform in 1989 in response to a GATT case brought by the Community against Japan. This case had been won in 1987, when a GATT panel judged the then liquor tax regime as protectionist, to the detriment of foreign imports of spirits. ² What was protected was Japan’s production of locally produced and largely locally consumed alcohol known as shōchū, which exists in two types, of which the generally more expensive (ko or ‘A’) is very similar to vodka.